Mike Bloomberg Broke Election Law, Admit His Own Lawyers

February 22, 2010

Even Mike Bloomberg’s lawyers say he broke election law when he gave $1.2 million to the Independence Party right before the November election.

The mayor’s media guru, Howard Wolfson, and his elections lawyer Ken Gross told the Daily News that Bloomberg’s two $600,000 personal checks to the party were used for poll-watchers, drivers, cellphones and food for election day. In their eagerness to account for the missing money — most of which went to a mysterious, unincorporated firm now under investigation by Manhattan District Attorney Cy Vance — the two unwittingly admitted to an apparent violation of city and state campaign finance laws.

That’s at least what a brief filed by Gross himself in September 2009 seems to indicate. Gross, a Washington-based, former counsel to the Federal Elections Commission whose firm, Skadden Arps, was paid $282,175 by Bloomberg’s campaign, responded to a complaint submitted to the city’s Campaign Finance Board by making arguments that may come back to haunt his client.

Democratic candidate William Thompson alleged in the August 20 complaint that an earlier series of $1.6 million in Bloomberg personal contributions to the Independence Party, as well as another $1.7 million in personal donations to Republican and other political committees, was an end run around the city’s campaign finance system, and should have been funneled through his campaign committee.

Gross argued in a 14-page response to Thompson that Bloomberg’s “campaign committee is only required to report as expenditures those contributions it made to other committees for the purpose of furthering his re-election campaign.” That was a good argument then — since Gross was contending that the committees that got Bloomberg’s personal largesse didn’t spend the money to benefit his campaign. Not so good now, however, when Gross concedes that Bloomberg’s donation to the Independence Party was used precisely for that purpose.

The lawyer also argued that most of Mike’s $3.3 million was given to party housekeeping accounts and cited the state laws that specify that such accounts cover the day-to-day expenses of running a party and are not supposed to be used to pay campaign expenses. According to Gross, the millions given to these accounts by Bloomberg “could not be used to support any candidate.”

“By definition,” went Gross’s ringing conclusion, “if the Housekeeping funds could not be used for candidate support, Mayor Bloomberg’s contributions to these accounts could not have been for the support of his candidacy.” Of course, he’s saying now that the $1.2 million was given to a housekeeping account specifically to support Bloomberg’s candidacy. Gross did not reply to very specific messages left for him by the Voice.

Eric Friedman, the spokesman for the Campaign Finance Board, would not comment on the question of whether the Bloomberg campaign has essentially admitted to a violation of its statutes. He did note that the CFB “audits each and every campaign” to make sure they are “complete and accurate,” certainly indicating that it would be auditing this one. It’s unclear if the board, a majority of whose members are appointed by Bloomberg, will refer any if its preliminary findings to Vance’s office, which is actively assessing the party donations.

Laurence Laufer, the attorney who filed the complaint for Thompson, says that there is a third legal issue, beyond the CFB and the housekeeping issues. Laufer says that even if Bloomberg chose to make the contributions personally, he still had to report them as a candidate to the city and state Board of Elections. Laufer says there’s “a reporting obligation on the mayor’s part”under section 14104 of the state election law even if, by some quirk, he was not required to report the donations to the finance board.

“If the expenditures were to aid the campaign,” said Laufer, Bloomberg “had to report them either one way or the other,” as a committee expenditure or the personal expenditure of a candidate. The section cited by Laufer makes it a Class A misdemeanor for “any candidate” not to file a sworn statement “as to all moneys paid, given or expended to aid his own nomination or election,” and specifically includes “contributions to political committees.”

It’s unclear if the apparent CFB breaches might also be misdemeanors (filing a false statement), but the housekeeping account submissions do appear to be penal violations. If Bloomberg had given his donations to the party’s campaign committee — which is allowed to spend its money on pollwatchers and drivers and cellphones — he would only have been allowed to give approximately $94,000. His decision to give it to the housekeeping account skirted that limitation, and both giving and accepting contributions beyond those limits is a crime.

Of course, the question is why did Bloomberg make these two payments — on October 30 and November 2 — in this potentially illegal way? Had he given the contributions through his campaign committee, they would have been disclosed immediately on the CFB’s website. He would also have had to provide detailed backup about the purpose of the expenditure. By making the contributions personally, he construed the law to mean he didn’t have to report them at all — a highly dubious position.

The only way the public ever learned about the donations was when the Independence Party reported receiving them in mid-January, two and a half months later. State disclosure requirements are so minimal that reporters had to unearth how the funds were spent. The media is now focused on the $750,000 of Bloomberg’s money that wound up delivered to a company run by a Bloomberg operative named John Haggerty Jr., but as intriguing as that storyline is, the far more salient issue is what laws the mayor may have violated himself.

Ironically, the violation may well be a continuing one. Gross’s firm is obviously still representing Bloomberg on this matter, answering Post and News questions and ducking mine. Who do you think is paying him? Mike or his defunct committee?